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With Israel’s economy going through its worst recession in decades, it would hardly seem the right time to launch the first joint venture between American and Israeli law firms. But Boston’s Sullivan & Worcester and ZAG & Co. of Tel Aviv believe that tough times call for novel measures. The rapid growth of Israel’s high-tech industry in the past decade led to a surge in demand for American legal services. Protectionist licensing rules and a preference by local firms for spreading their referral business around has meant that the demand has been met largely by the stateside offices of big-name American tech and corporate players. That pattern has cost Israeli startups dearly, with five- and six-figure legal bills. Top American firms’ rates are about double that of Tel Aviv’s top-tier firms. Initially, ZAG (short for Zysman, Aharoni, Gayer & Co.) tried to tap the market by opening its own small office in New York two years ago. An introduction by a mutual friend led to the first informal contacts between Shmuel Zysman, a founding partner, and Sullivan & Worcester partner Harvey Bines. Zysman had never heard of the Boston firm before the meeting, and Sullivan & Worcester had little exposure with the Israeli corporate world. “We were looking for a way to expand our New York and high-tech presence, and the Israeli market presented a promising opportunity,” says Bines. After nearly a year of negotiations, the firms signed an agreement in late December to set up a 50-50 joint venture. Rather than letting a recession get in the way of a promising idea, the two firms are giving their venture a cost-saving spin. “We’ve been looking to offer our clients a substantial savings by finding a way to represent them on both sides of the Atlantic,” Zysman says. Both offices are contributing members to the joint venture, which operates as a separate entity. Twenty-two lawyers work for ZAG/S&W, including six who hold Israeli law degrees. They work out of the New York office of Sullivan & Worcester on Fifth Avenue. Although much smaller and more economical than top-tier American firms, the old-line Sullivan & Worcester’s 170 lawyers in Boston, New York and Washington, D.C., have a blue-chip corporate clientele. The firm’s New York commercial and high-tech expertise was boosted last November by the acquisition of eight-lawyer Piliero Goldstein Jenkins & Sullivan. ZAG is far younger than its new joint venture partner — it was founded in 1986 — but at 40 lawyers it ranks among Israel’s top 15 firms. It has made a name for itself representing some of the biggest names in the Israeli corporate world, including AudioCodes Ltd. and Israel Discount Bank Ltd. Zysman boasts that the new office has already made an impact with clients. But he wasn’t always so bullish. The clincher came last June when several Sullivan & Worcester partners arrived in Tel Aviv with their spouses only days after a major terrorist attack. “With flights being canceled and the State Department warning Americans against traveling to Israel,” says an emotional Zysman, “this showed me who they really were.” Neal Sandler is a free-lance writer based in Jerusalem.

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